Welcome! Release out.
Bottom Line: Microsoft missed on revenue but hit EPS on mid-quarter cost cuts (the GAAP EPS number included severance charges). Revenue dropped 6% year over year, which is the first drop in memory but isn’t horrible under the circumstances. The online business blew.
The culprits: weak PC and server markets. Microsoft’s enterprise business is still strong. The company expects the weakness to continue at least through the end of this quarter.
Everything’s relative, of course, so it’s worth noting that even the weakened Microsoft generated $5.5 billion of cash in the quarter.
Results vs. consensus:
- Revenue: $13.65 vs. conensus of $14.1 billion
- EPS of $0.39 ($0.33 GAAP) vs consensus of $0.39
Divisional revenue breakdown:
- Client revenue: $3.4 billion (in line)
- Server/Tools revenue: $3.5 billion (in line)
- Online Services revenue: $721 million (very weak)
- MBD revenue: $4.5 billion (slightly weak)
- Entertainment revenue: $1.6 billion (in line)
The conference call will start at 5:30 pm EST (listen here). We won’t be covering the call live.
Microsoft got hammered last quarter, missing expectations for the first time in years. The company also pulled its guidance off the table, so Wall Street’s “estimates” this quarter are actually estimates. The consensus calls for a slight decline in revenue year-over-year.
Please join us here for live analysis of the numbers and earnings call as soon at 4PM ET / 1PM ET.
Consensus for key metrics:
- Revenue of $14.1 billion
- EPS of $0.39
Approximate consensus divisional revenue breakdown:
- Client revenue: $3.4 billion
- Server/Tools revenue: $3.7 billion
- Online Services revenue: $850 million
- MBD revenue: $4.7 billion
- Entertainment revenue: $1.6 billion
- June: $15 billion / $0.40
- FY 2009 (June): $60.8 billion / $1.74
- FY 2010 (June): $61.8 billion / $1.92